If the interest rate is positive, the present value of $10 to be received in the future is
A. less than $10.
B. equal to $10.
C. more than $10.
D. Any of the above is possible, depending on the interest rate and when the payment is to be received.
Answer: A
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The supply of loanable funds curve has a positive slope because the
A) lower the real interest rate, the higher the return to saving. B) lower the real interest rate, the lower the return to saving. C) average return in the stock market is directly related to the real interest rate. D) quantity of investment increases when the real interest rate increases. E) higher the real interest rate, the lower the return to saving.
Suppose that Mighty Mike's Sandwich Shop was started in 1998 and 100 percent of the $250,000 needed to start up the company was raised by selling shares of stock. In 2000, the company distributed its entire profit of $15,000 to shareholders
If the market interest rate is 5 percent, what is the level of economic profit earned by the firm's stockholders?